…[T]he results of this analysis show that the case for bundled hospital payments for the privately insured is much weaker — post-acute care and other ancillary services account for a relatively small share of overall spending on hospitalization episodes, and they account for almost none of the variation in episode spending from one hospital to another.

The problem with Medicare bundling as a new idea is that Medicare Part A hospital payments already are bundled via the Diagnosis Related Groups (DRGs). What Medicare calls bundling is just extending the current bundle to include more services. It is not really conceptually the same as allowing hospitals to bundle and re-bundle services in response to demand.

“But the results of this analysis show that the case for bundled hospital payments for the privately insured is much weaker—post-acute care and other ancillary services account for a relatively small share of overall spending on hospitalization episodes, and they account for almost none of the variation in episode spending from one hospital to another.”